The UFC has Financial Problems

The UFC continues to set and break records for pay-per-view revenues so how is it possible that they have financial issues on the horizon?

Talk to the everyday UFC fighter and they all give you the same one liner when you ask about the current economic environment in the UFC: “You know what the UFC stands for don’t you? U Fight Cheap.”

It’s true and if the UFC isn’t careful it is going to result in an increasing number of competitive organizations attracting top talent away from the UFC. Instead of a manageable growth in the allocation of pay-per-view revenues to the fighters, there will be a sharp inflection point and salaries will start to mirror those of the other top mainstream sports that constantly have compensation challenges.

Pick any top mainstream sport and you can understand why the UFC will have financial hurdles that are best dealt with now. Baseball anyone?

Year Average Salary 1981 $185,651 1989 $512,084 2007 $3.2 million

Right now the UFC is enjoying the profits of the 1981 era baseball. See the issue? The UFC is growing faster than any other mainstream sport, information is widely available and disseminated amongst the fighters and agents and unions are more prevalent now than back in the day. The massive inflection point in UFC salaries is coming… fast.

A logical financial move for the owners of the UFC would be to take their company “public” as the WWF (now WWE) did back in 1999. Raise a pile of money for the company to continue expanding at a rapid pace and provide financial liquidity for the founders. The problem for the UFC at this point with a public offering would be the requirement to disclose their financial results to all of us. We would see the excessive profits being made by the organization from our investment in tickets, merchandise, pay-per-view signups and the paltry amount being shared with our heroes in the ring and they would risk a fan backlash.

The UFC is going to have challenges as a result of its massive success. What to do?

Quick fixes are never easy but the timeline to make changes is short.

Three recommendations for the UFC from the team at MMAtraining.com:

Start with putting in a floor payday for any fighter. At $5,000 for showing up and $5,000 for a win, a fighter that loses barely covers the costs to fly his team to the event.

Put in place a compensation committee that has fighter representation. It is a step in the right direction and might just fight off a unionized network of fighters in the future

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The success of the UFC to date cannot be debated – it is the stuff that makes a good Harvard business case.

What will define the UFC’s ultimate ranking against the NFL, NBA, MLB and NHL will not be the GSP’s or Silva’s but how they handle what is always the most challenging aspect of any successful venture – the money.